Put Spread on GRMN on 2/21/2013

Garmin Ltd. (GRMN) designs, develops, manufactures, and markets global positioning system (GPS) enabled products and other navigation, communication, and information products for the automotive/mobile, outdoor, fitness, marine, sailing and yachting, and general aviation markets worldwide.

The company offers a range of automotive navigation products, and various products and applications designed for the mobile GPS market; GPS enabled handheld products for hunters, hikers, geocachers, outdoors enthusiasts, cyclists, and golfers; dog tracking systems; tracker systems; and training assistants for athletes. 

Shares have formed a bearish "flag" following the release of its quarterly results. Lower prices are expected for this stock. Garmin said earnings per share fell 22% to $0.66 from $0.85 a year ago. Revenue declined 16% to $768.5 million as demand for standalone navigation devices continued to wane, since more consumers own smartphones already equipped with equivalent GPS capabilities. Garmin's results were significantly below analysts' projections of $0.74 profit per share and revenue at $833.7 million. EPS guidance was also well below analyst expectations, as management projected 2013 earnings at $2.30 to $2.40 a share versus estimates of $2.89. GRMN last traded at $35.10

Trade Buy 1 April $35.00 Put at $2.10 Sell 1 April $32.00 Put at $0.80 For a net debit of $1.30 Profit/Loss Analysis Breakeven at $33.70 Maximum profit is $170.00 at strike of $32.00 Maximum loss is ($130.00) at strike of $35.00 Closing Summary Sold 1 April $35.00 Put at $2.11 Bought 1 April $32.00 Put at $0.35

Position closed on 3/26/2013 at price of $1.76 with a 35.38% gain in 33 days.

Updates

3/26/2013 2:18:21 PM

We are closing GRMN position with a 33% return as our 30-day time period expired.

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